Digital supply chain pilot project a success

Melbourne Health Logistics’ (MHL) Supplier Improvement Pilot Project, involving 10 small-to-medium enterprise (SME) participants, proved to be a great success. To benefit its supply chains, focus was on applying data capture technologies, making data quality improvements and introducing suppliers to Electronic Data Interchange (EDI).

Set to implement a transformative warehouse management solution, MHL aims to solve challenges with their supply chain and inventory management. The new system will require suppliers to adjust the way they provide product and information. To support this, MHL approached the federally funded AusIndustry Entrepreneurs’ Programme to work with suppliers and build capability.

The vision was for SME suppliers in the health sector to digitise their supply chains, ensuring the ability to meet the needs of MHL and the broader industry. This meant reviewing processes and technology capability and changing manual methods to the use of automation and digital technologies.

With data standards as the foundational elements, key focus areas included:

• Use of global product identification standard, GTIN (Global Trade Item Number).
• Use of global location identification standard, GLN (Global Location Number).
• Allocation of GTINs to products ensuring information is captured via barcodes, with additional information such as batch and expiry date included for products.
• Allocation of GLNs to locations (physical and virtual) enabling traceability across the supply chain.
• Data management to ensure quality and consistency of data to support processes in the supply chain from purchasing through to point of use.
• Building an EDI capability.
• Supporting digitisation of supply chain transactions.

Program partners dedicated to success

• MHL
• AusIndustry Entrepreneurs’ Programme
• Department of Industry, Science, Energy and Resources (DISER)
• Health Purchasing Victoria (HPV)
• Southwest Health
• Ballarat Health Services
• Association of Healthcare Supply & Procurement Officers (AHSPO)
• GS1 Australia
   

Brett Henderson, a Business Facilitator with the Entrepreneurs’ Programme was impressed with the SME suppliers who signed up for the pilot program.

“They took on the challenge by investing considerable time and money, in many cases up to $100,000,” Brett said.

“What we have found from a majority of the participants is that they not only embraced the pilot, but they looked for more ways the technology could help their business. They took a holistic approach and as they did this, they started to recognise opportunities to really improve revenue-generating capabilities and productivity improvements.

“Once they saw this, they began to envisage other benefits that could flow through. While it is still early in the process, there’s a real change in a majority of the businesses who are in the program, in terms of capability-building and finding new opportunities for the business.”

Suppliers who participated in the pilot included GAMA Healthcare, Imaxeon, Intersurgical, Metwood, Multigate Medical Products, OAPL, Orthocare, Parker Healthcare, Sentry Medical and Ultra Health Medical.

EDI benefits focus around efficiency gains

A lead in the project was Health Purchasing Victoria (HPV), which partners with public health services to identify and procure goods and services for hospitals across Victoria.

As Director of Data and Systems at HPV, Rob identified many key benefits of EDI including:

• Providing real-time processing and eliminating time needed to manually send, receive and enter orders.
• Reducing expense of paper storage, printing, postage, mailing and recycling.
• Improving business cycles by ensuring stock levels are kept constantly up-to-date and visible.
• Improving accuracy and minimising data entry errors.
• Improving forecasting.
• Eliminating paper trails.
• Reducing time taken to manually create invoices and process orders.
   

“While EDI definitely delivers cost savings, the efficiency gains are the stand-out benefit for suppliers along with using their resources better,” he said.

“At the moment about 25% of purchase orders come through EDI. I believe that we can reach 50% within three years. By adopting EDI, suppliers can help to futureproof their business.

“The pilot has also highlighted how important it is to have one national product catalogue to store product information used by health services throughout Australia. Currently, there are over 20 catalogues used throughout Victorian health services alone.

“With a single common catalogue, a supplier only needs to update one catalogue when they have a new product or the specifications and descriptions have changed. This is another huge efficiency boost,” he added.

Business Facilitator Brett Henderson (seated) and HPV Director Data and Systems Rob Setina both spoke about the many benefits of EDI for suppliers and how it can help to ‘futureproof’ their business.

A common system to futureproof your business

Santo Cavaleri, General Manager of the Supply Chain at Melbourne Health said, “Suppliers need to get involved! We want to do more trading with our suppliers via EDI.

“Melbourne Health is currently implementing a warehouse management system that relies on the transfer of data such as GTINs. It’s important for us all to become compliant with the 21st century and the best place to start is by talking to GS1. Coles and Woolworths have been doing EDI for years, whereas the medical industry is underdeveloped. There are a lot of benefits we’re not harnessing.

“As a state and a nation, we’ve got to have a common goal. We need one common system for everyone. We need leaders not laggers.”

Collaboration leads to bigger opportunities

As a supporter of this project, GS1 Australia was pleased to see the real benefits achieved by those involved in the project.

Catherine Koetz, GS1 Australia’s Healthcare Industry Manager said, “An important part of our work with the healthcare sector is supporting cross-industry collaboration and partnerships like this program to help with the much-needed digital transformation.”

AusIndustry’s Brett Henderson and Mike Sewell were on the frontline in working with suppliers who would provide honest feedback that was then reviewed by Melbourne Health.

“In many cases, we’d adapt the project to meet the changing needs of the participants,” Brett said.

“It continually evolved and was quite collaborative. Suppliers recognised where they needed to develop their capabilities and invested resources as needed.

“They understood the benefits of looking at a broader picture saying, ‘Is this just Melbourne Health or is it broader?’ And in looking broader, they could see the bigger opportunities that will come as a result,” he added.

Australia needs to catch up to global trend

Aldo Santo, President of AHSPO and Chair of the pilot committee, said that Australia needs safe and secure precision health care.

“Digitisation is a global megatrend and all healthcare suppliers need to come on board.

“We need to be aware that by 2030, Australia’s ageing population could see public health expenditure increase by between 1–4% of GDP. We need to be better at what we do and healthcare supply chains are directly related to improving patient outcomes.”

Success includes numerous criteria:

• Adoption of GS1 standards — ‘one product, one code’.
• Alignment to a national product catalogue.
• Having EDI capability.
• Implementing a strategy to maintain accuracy and build towards the platinum GS1 standard.

A digital future for health care in Australia

While it will be several years before the supplier-to-warehouse level is fully engaged, the next step is to get into the hospital and get to the patient bedside, which is already in the planning process. This is a major step to making national healthcare supply chain standards happen.

Main image caption: Participants at the Melbourne Health SME Supplier Partnership Workshop held at GS1 in February, who were extremely pleased with the outcome of the pilot project.